Japan has New York hedge fund manager Daniel Loeb to thank for its biggest stock market surge since 1988. Investors have been taking inspiration from Loeb's surprising success with the Japanese robot maker Fanuc.
When Loeb bought a stake in the notoriously opaque company earlier this year and started demanding changes, few in corporate Japan believed he would get anywhere. It's not just that Fanuc was known for its insularity; foreign activist investors had a long history of failure when dealing with corporate Japan.
So when Fanuc President Yoshiharu Inaba started heeding Loeb's demands — inviting journalists to the company's campus near Mount Fuji, opening a shareholder relations department and doubling the percentage of profit the company pays out to shareholders — other foreign investors took note. They began flocking to the Nikkei stock exchange in hopes of getting at the trillions of dollars sitting on Japan's corporate balance sheets. (It's estimated that executives are hoarding cash that amounts to half the country's annual $4.9 trillion of output.)